Irish Supreme Court Rules: Subway Bread is not a Bread
Subway, an American franchise that primarily sells salads and submarine sandwiches, is one of the fastest-growing franchises in the world. It had stores at 41, 512 locations in more than 100 countries by the year 2019.
Recently, Subway found itself at a crossroad in Ireland. It was one of the bizarre moments of the year 2020 when Ireland's Supreme Court ruled that Subway bread cannot be considered as bread for tax purposes as it was too sugary.
According to the Court Subway's sandwiches are instead a "confectionery item" which is closer to a cake.
This ruling given by the bench of 5 judges of the Supreme Court followed an appeal made by Bookfinders Limited, Subway’s Irish franchisee based near Galway.
The ground for passing such a judgement is that as per Ireland’s Value-Added Tax Act of 1972, ingredients in bread such as sugar and fat should not exceed 2% of the weight of flour in the dough. And whereas it was observed that the Subway sandwiches, both white and wheat rolls, has around 10% sugar content of the flour in the dough. Therefore, it cannot be considered as bread for tax purposes.
Further, as per Ireland’s Value-Added Tax Act of 1972, staple food attracts 0% VAT and bread is classified as a staple food. But consequent to the ruling by the highest court, the subway rolls used in the preparation of sandwiches shall now be subject to 13.5% VAT.
This all started when the Bookfinders’ had requested for a refund of VAT, which the tax authority has refused in the year 2006.
Bookfinders’ made an appeal against the refusal of the refund to the Commissioner and the High Court. Both government authorities upheld the decision of the tax authority to refuse the refund of VAT to Subway.
